Russian oil is a crucial source for China, the world’s largest importer. Any significant reduction in Russian production could disrupt the delicate balance of global oil supply, potentially leading to a price surge. This is further compounded by the fact that Russia is the second-largest oil producer in the world.
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The Ukrainian military has decided that Russian oil facilities are a perfect target for drone attacks deep into the territory of the nation that invaded it. This activity has the chance of disrupting one of Russia’s largest sources of money. It also shows that Ukraine can hit distant targets without its army.
High Gas Prices
The byproduct of these attacks is that they are among a few actions that have pushed up crude prices already. Another worry is a battle between Israel and Iran. Due to this, the US may sanction Iran, which would considerably curb its exports. According to Bloomberg, “Iran’s attack on Israel has intensified pressure on Biden to crack down on crude exports from the Islamic Republic.”
Worries about a shortage have already begun to push oil toward $100, and the breakout of wider military activity in the Middle East could drive it much above that. Consequently, US gas prices have risen to about $3.75 for an average gallon of regular nationwide. That could move toward $5, where they were less than two years ago when the Russian invasion began.
It is hard to underestimate the catastrophe much higher gas prices could cause in the US and other developed countries. They could add hundreds of dollars a month to what Americans spend on gas. High oil prices also affect truck delivery costs and probably the cost of petrochemical products used across the US economy.
The US has appeared to have moved toward or arrived at a “soft landing” after a spike in inflation. Oil prices could change that quickly.
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